Big turn to the south?

Today we will look at the #GBPJPY pair and start with the monthly chart. We can see that the pair started rising from September 2019 and moved up almost without interruption until October last year. It is possible that the October high at 172.113 will remain the chart’s high in the post-Brexit years. The growth attempt after a two-month rollback from the high is very impressive — several months of growth could not compensate for the fall in December last year, and the first days of April, after marking time in March, show a downward trend. It may well be that the pair is starting a long march south towards previous lows around 124.

Let’s move on to the daily chart and see what awaits the pair in the coming weeks. We see that the upward movement stalled already in April last year, when the pair reached 168.416 and began to move in a wide range. We see this only after the passage of time, that the pair moved into the distribution phase, and then it looked just like a normal rollback on a growing trend. After that, the pair was able to rise above only once, in the second half of October, when the last high was formed. I draw your attention to the strong downward momentum that began on September 22, which may have required the intervention of a market maker due to the lack of buyers in the market, already at that moment it was possible to conclude that buyers were finally exhausted and the mood of market participants changed. After the October 30 high at 172.113, the pair has not risen higher, but has not gone below the value of 155 either. Large participants may be hoping for more volume for a good move down, so we need to attract more “fluctuating” buying money and we again see movement in the range . Daily moving averages confirm a change in trend direction, although not very confident, but we must not forget that this is just the average closing price of daily candles for 100 or 200 days and is not a factor influencing the price, although traders use moving averages to place their orders, which is used by large participants who need counter liquidity. Thus, if the necessary volumes of counter orders have already been collected, then we will see the beginning of the participation phase and the pair will start moving down for a long time. If liquidity has not yet been gained, then the pair may make one or more fluctuations. If the whole movement of the last year is a deception, a trap for simpletons, then the pair should still move down so that as few buyers as possible remain on the market and only then start moving up, but this option seems less likely to me, since over the past year, after the growth stopped, it was already possible to recruit the required number of sellers, especially after a strong drop in September last year. Let’s see how events will develop in the future, according to which of the possible scenarios.

After reaching a local maximum this Tuesday, the pair started to decline, but today it is trying to grow again. To understand what is happening — go to the hourly chart. We see that the growing movement that began on March 24 ended on the afternoon of Tuesday April 4 (the order of alternation of highs and lows has changed). Today’s pullback does not yet have a sufficient number of followers and has not been able to raise the price above 164 for several hours. If additional buyers with large volumes do not appear by the end of the day, and this is unlikely to be so far from local lows near the lower border of the range, then the pair will most likely continue to decline at least to this border, and if counter liquidity is gained, then further down.

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